Is Devon Energy (DVN) a Great Value Stock Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Devon Energy (DVN). DVN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors will also notice that DVN has a PEG ratio of 1.04. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DVN's industry has an average PEG of 1.04 right now. DVN's PEG has been as high as 3.66 and as low as 0.70, with a median of 1.58, all within the past year.

Investors should also recognize that DVN has a P/B ratio of 1.65. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.24. Over the past year, DVN's P/B has been as high as 2.14 and as low as 1.10, with a median of 1.58.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DVN has a P/S ratio of 1.22. This compares to its industry's average P/S of 1.58.

Finally, investors will want to recognize that DVN has a P/CF ratio of 3.34. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.30. DVN's P/CF has been as high as 12.28 and as low as 2.18, with a median of 4, all within the past year.

These are only a few of the key metrics included in Devon Energy's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DVN looks like an impressive value stock at the moment.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.